LATAM Airlines Group exits Chapter 11 – Airways Magazine

DALLAS – Latin America’s largest airline, LATAM (LA) has high hopes of exiting Chapter 11 in the fourth quarter of 2022 after securing required financing and obtaining US bankruptcy court and shareholder approval for its restructuring plan.

Group Chief Executive Roberto Alvo said: “We closed the second quarter with significant progress in our Chapter 11 reorganization process, and we expect to emerge from it in the last quarter of this year.

The CEO warned that although the group has made progress in its operational recovery, it continues to remain “cautiously optimistic for the months ahead, closely monitoring fuel prices and macro-economic variables, as the industry finds itself still in the midst of a very dynamic situation”. environment.”

LATAM Airlines Boeing 777-32W(ER) registered as PT-MUA in special Star Wars-Galaxy’s Edge livery. Photo: Alberto Cucini / Airways

Chapter 11 Exit

A bankruptcy judge approved the Chilean airline’s Chapter 11 exit plan in the second quarter of the year – the plan provided the airline with $5.5 billion in new capital to inject into the business and brought it closer to the end of its two-year restructuring. treat.

Judge James Garrity of the United States Bankruptcy Court for the Southern District of New York, explained that the Los Angeles Chapter 11 exit plan was crafted from “good faith and arm’s length negotiations” between LATAM and its stakeholders and provides the most suitable approach to suppress the case of bankruptcy.

The airline won shareholder approval for the new capital structure and financing instruments during a presentation of the restructuring plan at a general meeting. The presentation was a success since 99.8% of the shares present or represented at the meeting (77.5% of the total shares with voting rights) voted in favor of the plan.

Therefore, this allows LA to move to the final stages of regulatory requirements in the base nation, Chile, to ensure the plan is implemented.

LATAM Airbus A320-214 registered PR-MYQ. Photo: João Pedro Santoro/Airways

Previous funding

On July 8, 2022, LA filed its request for financing instruments with the Chilean market regulator. At that time, Los Angeles had posted a loss of $523.3 million in the second quarter.

However, the group highlighted that there has been a gradual recovery in its operations recording consolidated capacity (measured in available seat kilometers – ASK) of 72.6% compared to 2019. Comparing Q2 in 2022 to Q2 in 2021, capacity more than doubled (135.2% growth).

LATAM said the increase in capacity is due to the recovery of domestic markets in Brazil, Colombia and Ecuador, as well as the resumption of its international operations, amid sharp increases in fuel prices.

The airline filed for Chapter 11 in the United States on May 26, 2020, after facing economic turmoil due to the impact of COVID-19 on passenger throughput. Although the head office is located in Chile, LA is an American certificate of deposit and is listed on the New York Stock Exchange (NYSE) and the Santiago Stock Exchange.

Amid the Chapter 11 announcement, the Los Angeles stock ticker (LTMAQ) went unlisted on the NYSE and eventually moved to unregulated OTC Markets Pink on June 12, 2020.

LATAM currently has a fleet of 77 aircraft, a network of 148% destinations and 330 routes. The airline is optimistic with a better quarter approaching.

Featured image: Latam PT-MBU Airbus A319 (Aviao Solidario livery). Photo: João Pedro Santoro/Airways

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